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Time was when a U.S. stock-market listing was prestigious for Chinese companies and lucrative for people who brought them public—including bankers, lawyers, accountants, and various stock promoters. That's changed over the past couple of years, as a spate of U.S.-listed Chinese shares blew up amid lapses in disclosure, accounting restatements, and worse.

Last week, the accountants took a hit. The Securities and Exchange Commission accused the Chinese affiliates of the Big Four—Deloitte Touche Tohmatsu, PricewaterhouseCoopers, Ernst & Young, and KPMG—as well as another firm, BDO, of violating U.S. securities laws. The firms had failed to cooperate when the SEC demanded audit documents as part of its investigations into alleged frauds at nine Chinese companies. In a related development, the agency also chastised its Chinese counterpart, the China Securities Regulatory Commission, for not assisting its probe. As a result, the agency had little alternative but to pursue the auditors.

BARRON'S HAS CHRONICLED the accounting and other problems at dozens of Chinese outfits, many of which became public entities by buying U.S. shell companies—listed corporations that no longer operate active businesses. These reverse mergers require less disclosure than a typical initial public offering ("Beware This Chinese Export," Aug. 30, 2010).

Most of the companies that have gotten into trouble were audited by small firms. The selection of bigger accountants was supposed to start to clean up the mess and assuage investors' concerns. Regardless of their size, however, accounting firms contend that their employees could be jailed by Chinese authorities for violating secrecy laws if they share documents with the Securities and Exchange Commission without permission.

Accounting issues aren't confined to reverse mergers. In 2011, Longtop Financial Technologies, which went public through an IPO, was reported by its longtime auditor, Deloitte, to be recording fake cash and revenue. Longtop's American depositary shares subsequently were delisted by the NYSE. Deloitte resigned as the auditor, but didn't comply with the SEC's subpoena for its audit documents because it felt that doing so would violate Chinese laws.

A Deloitte spokeswoman said the SEC case "confirms that the issue of document production by Chinese accounting firms to foreign regulators is a matter that needs to be resolved on a profession-wide basis." She expressed hope for "a diplomatic agreement."

Next, an administrative-law judge will schedule a hearing. If the judge finds in favor of the SEC, the Chinese accounting affiliates could be prevented from auditing companies traded in the U.S. That could limit the Big Four's ability to audit multinationals operating in China. It also could bar them from getting a very big chunk of change in coming years.

The stock (ticker: STI) was changing hands at close to $27 late last week, up 52% since Barron's took a favorable view of the big Atlanta-based bank in a story at the end of last year ("Clouds Slowly Lift for SunTrust," Dec. 26, 2011). Since then, the shares have far outpaced the benchmark KBW Regional Banking Index, up 8%.

It's a big turnaround from 2011, when SunTrust dropped by 40%, as the South's housing markets remained deeply depressed. That has begun to improve, albeit gradually.

Investors, however, should be cautious about buying the shares right now. SunTrust, which has benefited from aggressive cost-cutting, could have a hard time finding more expenses to prune. In addition, its profits are being squeezed by the record-low interest rates. As old loans are paid off, new ones are coming on with significantly lower yields. SunTrust's net interest margin—the difference between the yields on its assets and the rates on its deposits and borrowings—fell to 3.38% in the third quarter from 3.49% a year earlier, and it's expected to go still lower next year.

A notable bright spot for the bank in the first three quarters was mortgage originations, helped by a wave of refinancing. But many homeowners have refinanced already—and home purchases aren't yet strong enough to pick up the slack, says Jack Micenko, an analyst at the Susquehanna Financial Group.

It isn't that the stock is expensive. It trades at 9.9 times estimated profit for 2013, below its peers' multiple of 10.1. But it's hard to see much upside. Morningstar puts the fair value at $26, about the current level. Micenko, who rates the shares Neutral, thinks they might edge up to $30.